Business Cycle Synchronization and Insurance Mechanisms in the EU
Technical University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); European Central Bank (ECB)
Organization for Economic Co-Operation and Development (OECD); University of Palermo - Istituto di Economia Politica
ECB Working Paper No. 844
In this paper we provide a positive exercise on past business-cycle correlations and risk sharing in the European Union, and on the ability of insurance mechanisms and fiscal policies to smooth income fluctuations. The results suggest in particular that while some of the new Member States have well synchronized business cycles, for some of the other countries, business cycles are not yet well synchronized with the euro area's business cycle, and risk-sharing mechanisms may not provide enough insurance against shocks.
Number of Pages in PDF File: 37
Keywords: Private savings, global imbalances, panel error correction model, pooled mean group estimation, emerging economies
JEL Classification: E20, E60working papers series
Date posted: December 21, 2007
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